LUxLeaks: Half-hearted response from EU Finance Ministers

The finance ministers of France, Germany and Italy today sent a joint- letter to the EU commissioner for economic and financial affairs and taxation Pierre Moscovici calling for new EU legislation on aggressive tax planning, through base erosion and profit sharing (BEPS) (1).

"While it is welcome that Eurozone finance ministers are finally waking up to the problem of tax dumping and aggressive tax avoidance, the measures the 'big 3' finance ministers are proposing are half-hearted and do not go far enough. The letter merely lists measures that have long been self-evident for the fair and proper functioning of the EU's internal market. They are failing to deliver a comprehensive and consequent response to the problems at hand.

"One missing element, which would be crucial for clamping down on these tax avoidance schemes, is full transparency on who owns what, notably P.O. Box companies, which enable profits to be shunted around off the radar. There are proposals on the table to this end in the draft EU anti-money laundering directive but they are being blocked by EU governments. Full transparency as regards the revenues and tax returns of all companies is also needed to address the murk in which these aggressive tax avoidance schemes thrive. This would be provided through mandatory country-by-country reporting but this is also missing from the proposals by the 3 finance ministers. They also shy away from calling outright for a mandatory corporate tax base for all businesses.

"If the European Commission and finance ministers are serious about tackling tax dumping, they must deliver a comprehensive a binding series of measures, rather than big political theatrics."